The lodging segment of the hospitality industry employs around 1.5 million workers and generates revenue of over $250 billion annually. This segment includes over 100,000 properties ranging from small motels with a handful of rooms to mega-hotels with over 1,000 rooms. Budget hotels provide only rooms while full-service hotels provide rooms, food and beverage service, meeting space, and other services. Resort properties may offer golf and other amenities while extended stay hotels have more apartment-like furnishings.
The lodging industry experiences cyclical, seasonal, weekly, and daily fluctuations. After seven years of strong growth, the COVID-19 pandemic hit the industry very hard in 2020-2021. During the pandemic, the industry's revenue and employment dropped by over 40 percent. Many hotels had to close, and for some of them, this ended up being permanent. Among those that didn't close, nearly all laid off or furloughed workers. After two down years, the industry recovered as travel picked up, but many hotels have not returned to their pre-pandemic staffing levels in an attempt to reduce labor costs and increase profits by providing fewer services to guests (e.g., infrequent rather than daily housekeeping). Earlier crises in the lodging industry include the recessions created by the financial crisis of 2008 and the tragic events of September 11, 2001, but the effects of the pandemic were even more severe.
Continued aggregate economic growth will likely benefit the lodging sector. But there are always uncertainties. Will video conferencing permanently reduce business travel? Will a new virus outbreak dampen hotel bookings or cause supply chain disruptions? Will inflation erode consumer confidence and leisure spending? Will labor markets remain tight? Has the Airbnb market become saturated? Only time will tell what the next few years will bring.
Depending on the hotel's location, different parts of the year may have much higher demand than others. In some years, the occupancy rate in Minneapolis in August is 30 percentage points higher than in January. During any given week, a hotel catering to business travelers may be very busy Monday to Thursday while resort hotels experience the opposite demand pattern. In the course of a single business day, the concentrated periods of check-in and check-out are the busiest. As is easy to imagine, food operations are busiest around meal times.
Within a hotel, the two major revenue centers or operating departments are i) Rooms and ii) Food and Beverage. The major service or cost centers are Administrative (including human resources, accounting, and information systems), Marketing, and Property Operations and Maintenance. These functions generally do not generate any revenue, but support the revenue-producing departments.
Accounting Department
Balance Sheet
Departmental Expense Statements
Hospitality Industry Background
HR Department
Labor Market Analysis
Getting Started training video and handout
Contract Proposal Worksheets (Word / Google doc)
Costing Program (Excel / Google sheet)
Internal Memos
(Restricted Access)